Home South Asia Pakistan No tax-free internet anymore

No tax-free internet anymore

“Internet and broadband services of up to 2 Mbps speed and 4 Mbps speed, the charges for which did not exceed Rs1,500 per month and Rs2,500 per month respectively, were exempt from sales tax, the said exemption has been withdrawn with effect from July 1, 2019,” added the notice.

tax

News Desk |

Sindh government has decided to impose 19.5 percent sales tax on internet and broadband services. After the decision, Sindh has joined other provinces – Punjab, Khyber Pakhtunkhwa and Balochistan – where 19.5% sales tax is already imposed.

Following the decision, it is estimated that the internet and broadband services are going to become expensive in Sindh. The Express Tribune has reported that an official of the Sindh Board of Revenue (SBR) has revealed that the same tax is already in place in other provinces and Sindh government has applied the new rate with effect from July 1.

“The Sindh Revenue Board has withdrawn the exemption of sales tax on services from the internet and/or broadband services with effect from July 1, 2019,” the paper quoted from notification of the SRB.

Telecom investment remained US $635 million during 2016-17, it said, adding that it embarked to total investment at US $15 billion from 2004 to 2017.

The notice has informed service providers that from July 1, all internet and broadband customers, irrespective of their speed or charges, will pay sales tax at the statutory rate of 19.5%.

“Internet and broadband services of up to 2 Mbps speed and 4 Mbps speed, the charges for which did not exceed Rs1,500 per month and Rs2,500 per month respectively, were exempt from sales tax, the said exemption has been withdrawn with effect from July 1, 2019,” added the notice.

The notice pointed out that in 2011, the internet and broadband services were given exemption from sales tax while in 2013 and 2016, notifications were issued for the imposition of partial sales tax on digital services.

Read more: Government launches online tax payment to broaden tax net

In addition, the paper said, the exemption from federal excise duty (FED) on internet and broadband services has also been withdrawn by the federal government with effect from July 1, 2019.

Telecom Companies Approach Ministry of Finance

In March 2018, Business Recorder reported that five leading telecom companies had collectively approached the Ministry of Finance for massive rationalization of duties and taxes on telecom industry at import as well as domestic stages in the budget for 2018-19.

According to the combined budget proposals of five leading telecom companies for 2018-19 submitted to the Finance Ministry, the paper said, telecom sector in Pakistan is a significant source of revenue generation for the national exchequer.

There will be a 3 percent increase in the bills as the tax incidence goes up to 18 percent from 15 percent, which will reflect in your bills.

It said that the telecom industry revenues stood at Rs369 billion for the 2016-17 as per Pakistan Telecom Authority (PTA) annual report for the year 2016-17 while the industry made a significant contribution of Rs161.4 billion to the national exchequer in terms of advance income tax, sales tax, import duties and PTA levies.

Telecom investment remained US $635 million during 2016-17, it said, adding that it embarked to total investment at US $15 billion from 2004 to 2017.

Broadband, Mobile Bills go up in India

In 2017, the Times of India reported that Telecom services were put under the 18 percent bracket in GST.

While preparing the readers to brace themselves for higher broadband and mobile bills as GST (Goods and Services Tax) kicks in, the paper said that the telecom services were put under the 18 percent bracket under the new tax regime compared to the 15 percent tax levied on the pre-GST regime.

Mobile bills too will increase, the paper noted after taking a confirmation from Airtel, India’s largest telecommunications services provider. “There will be a 3 percent increase in the bills as the tax incidence goes up to 18 percent from 15 percent, which will reflect in your bills,” an Airtel official told the paper. Officials at other telecom companies had also confirmed the imminent bump up in bills.

Read more: Paving roads for 5G internet in Pakistan’s digital landscape

In July this year, the telecom, broadband operators have called for higher tax exemptions. They have asked the government to exempt operators from levy of service tax on Right of Way permission granted by the Centre, state governments and the development authorities.

Facebook Comments